In the outlook for crude prices, a crucial factor is how far US shale oil production can grow. The shale revolution has transformed global oil markets over the past decade, reversing the long decline in US output, challenging Opec's influence, and helping to trigger the plunge in prices that began in 2014. It has meant windfalls for oil consumers, and some painful adjustments for producers.
The leap forward that made shale oil commercially viable for the first time was a revolution in productivity. EOG Resources and other pioneering companies worked out how to get oil to flow from wells at much higher rates than in the past, thanks to the application of improved techniques for horizontal drilling and hydraulic fracturing, and those productivity gains continued after the first breakthroughs. Exploration and production companies have been able to drill wells faster, and squeeze more oil out of them by targeting the right rocks more precisely and fracturing them more effectively. The outlook for the industry depends on how far those gains can be sustained and extended.
The track of the number of active rigs and oil production shows the huge productivity gains that have been made. A rush to drill in shale formations such as the Eagle Ford in Texas and the Bakken in North Dakota was followed by a flood of production, which mostly held up even after most rigs stopped running in 2014-16.